NEC (6701) AI Stock Analysis

• Market Cap: $7.58T
• Dividend Yield: 0.55%
• Average Volume (3M): 4.22M
• Price to Earnings (P/E): 31.7
• Beta (1Y): 1.08
• Revenue Growth: 2.68%
• EPS Growth: 56.38%
• Country: JP
• Employees: 105,276
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): N/A
• Shares Outstanding: 1,364,249,300
• 10 Day Avg. Volume: 5,395,680
• 30 Day Avg. Volume: 4,216,096
• PEG Ratio: 1.40
• Price to Book (P/B): 2.15
• Price to Sales (P/S): 1.22
• P/FCF Ratio: 19.23
• Enterprise Value/Market Cap: 0.75
• Enterprise Value/Revenue: 1.62
• Enterprise Value/Gross Profit: 5.05
• Enterprise Value/Ebitda: 11.35
• 1Y Price Target: $5,884.38
• Price Target Upside: 6.49% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 62 Neutral
• Price Target: ¥5,908.00 ▲(6.91% Upside)

NEC's strong financial performance is the most significant factor, supported by robust profitability and a stable balance sheet. However, technical indicators suggest potential short-term weakness, and the valuation appears high with a low dividend yield, which tempers the overall score.

Positive Factors

Strategic Partnerships

The expanded partnership with Broadcom to adopt VMware Cloud Foundation enhances NEC's capabilities in cloud solutions, strengthening its market position and offering long-term growth potential in the private cloud sector.

Revenue Growth

Consistent revenue growth indicates NEC's ability to expand its market reach and maintain demand for its products and services, supporting long-term business stability.

Profitability Margins

Improved profitability margins demonstrate efficient cost management and operational performance, contributing to sustainable financial health and competitiveness.

Negative Factors

Free Cash Flow Decline

A decline in free cash flow growth could limit NEC's ability to invest in new opportunities and maintain financial flexibility, potentially impacting long-term growth.

Dividend Yield

A low dividend yield may deter income-focused investors, potentially affecting NEC's attractiveness as an investment option in the long term.

Cash Flow Concerns

Concerns about cash flow sustainability could impact NEC's ability to fund operations and strategic initiatives, posing a risk to future financial stability.

NEC Business Overview & Revenue Model

Company Description

NEC Corporation operates as a provider of information and communication technology solutions in Japan and internationally. The company operates in five segments: Public Solutions, Public Infrastructure, Enterprise, Network Services, and Global. It provides systems integration services comprising systems implementation and consulting; maintenance and support services; outsourcing and cloud services; and system equipment. The company also offers network infrastructure products, including core network equipment, mobile phone base stations, optical transmission systems, and routers and switches; and services and management solutions, such as operation support system (OSS), business support system (BSS), and services. In addition, it provides safer city solutions, including public safety, digital government, and digital finance; software services for service providers, including OSS/BSS; network infrastructure comprising submarine systems and wireless backhaul; and system devices, such as display and projectors, and energy storage systems. Further, the company offers hardware products, such as servers, mainframes, supercomputers, storage products, business and personal computers, point-of-sale systems, automatic teller machines, control equipment, and wireless LAN routers; and software products, including integrated operation management, application servers, security, and database software. It serves public, healthcare, government and media, manufacturing, retail and services, telecommunications, and finance industries. NEC Corporation has collaboration with Analog Devices, Inc. to provide a 5G Network Massive MIMO Antenna Radio Unit for Rakuten Mobile. The company was formerly known as Nippon Electric Company, Limited and changed its name to NEC Corporation in April 1983. NEC Corporation was incorporated in 1899 and is headquartered in Tokyo, Japan.

How the Company Makes Money

NEC generates revenue through multiple streams, primarily from the sale of hardware, software, and integrated solutions in the IT and telecommunications sectors. Key revenue sources include network systems, which provide hardware and software for telecommunications operators, and public safety solutions that cater to government contracts. The company also earns income through systems integration, where it designs and implements complex IT systems for enterprises and public organizations. Significant partnerships with telecom operators and government agencies play a crucial role in securing large-scale contracts, contributing to NEC's earnings. Furthermore, the company's investments in R&D enable it to innovate and stay competitive, allowing for potential growth in emerging markets such as AI and cloud services.

NEC Financial Statement Overview

Summary

NEC demonstrates strong financial health across all verticals. The income statement reflects substantial growth and profitability, the balance sheet shows stability with conservative leverage, and the cash flow statement indicates robust cash generation and management. The company's financials are well-positioned for continued success in the Information Technology Services industry.

Income Statement

NEC's income statement shows strong performance with a significant revenue growth rate of 74.1% in the TTM period, indicating robust expansion. The gross profit margin of 31.5% and net profit margin of 5.8% reflect healthy profitability. The EBIT and EBITDA margins are also solid at 8.5% and 13.0%, respectively, showcasing efficient operations. Overall, the company demonstrates strong growth and profitability metrics.

Balance Sheet

The balance sheet is stable with a manageable debt-to-equity ratio of 0.27, indicating a conservative leverage position. The return on equity (ROE) is 10.4%, reflecting effective use of equity to generate profits. The equity ratio stands at 48.9%, suggesting a strong equity base relative to total assets. Overall, NEC maintains a solid financial position with prudent leverage and good returns.

Cash Flow

NEC's cash flow statement is strong, with a remarkable free cash flow growth rate of 74.9% in the TTM period, indicating improved cash generation. The operating cash flow to net income ratio of 2.46 and free cash flow to net income ratio of 0.77 highlight efficient cash conversion. Overall, the company exhibits robust cash flow management and growth.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	3.51T	3.42T	3.48T	3.31T	3.01T	2.99T
Gross Profit	1.13T	1.06T	1.01T	958.25B	886.41B	861.18B
EBITDA	500.95B	422.03B	382.92B	356.76B	330.96B	331.06B
Net Income	234.55B	175.18B	149.52B	114.50B	141.28B	149.61B
Balance Sheet
Total Assets	3.99T	4.32T	4.23T	4.04T	3.82T	3.73T
Cash, Cash Equivalents and Short-Term Investments	454.12B	584.62B	476.49B	419.46B	430.78B	523.35B
Total Debt	525.46B	666.36B	573.64B	608.48B	597.38B	702.86B
Total Liabilities	1.94T	2.24T	2.14T	2.13T	2.04T	2.16T
Stockholders Equity	1.97T	1.95T	1.92T	1.62T	1.51T	1.31T
Cash Flow
Free Cash Flow	365.27B	218.00B	171.46B	74.41B	76.41B	203.97B
Operating Cash Flow	463.10B	344.41B	271.23B	152.13B	147.52B	274.91B
Investing Cash Flow	-319.92B	-242.17B	-76.02B	-49.59B	-63.38B	-87.49B
Financing Cash Flow	-178.64B	7.03B	-155.51B	-122.79B	-189.62B	-33.61B

NEC Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5526.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6701, the sentiment is Positive. The current price of 5526 is below the 20-day moving average (MA) of 5794.25, above the 50-day MA of 5412.04, and above the 200-day MA of 4208.88, indicating a neutral trend. The MACD of 22.76 indicates Positive momentum. The RSI at 45.07 is Neutral, neither overbought nor oversold. The STOCH value of 13.93 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6701.

NEC Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6702	74 Outperform	$7.21T	15.66	15.02%	0.71%	-8.58%	83.16%
4307	74 Outperform	$3.10T	30.77	22.48%	1.12%	4.50%	16.63%
3626	73 Outperform	¥1.19T	22.47	―	1.46%	4.95%	9.54%
9719	69 Neutral	¥1.77T	28.87	―	1.48%	42.98%	48.88%
6701	62 Neutral	$7.58T	31.72	11.69%	0.55%	2.68%	56.38%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
9613	61 Neutral	―	―	―	―	3.73%	11.64%

NEC Corporate Events

NEC Restructures Fire and Disaster Prevention Business

NEC Corporation announced a corporate restructuring involving the transfer of its fire and disaster prevention business to NESIC Holdings, Ltd., and subsequently to NEC Networks & System Integration Corporation. This move is part of a broader strategy to strengthen NEC’s business foundation in the digital transformation and social infrastructure domains, enhancing its capabilities in serving domestic regions and local governments.

NEC Corporation Acquires CSG Systems to Strengthen U.S. Market Presence

NEC Corporation has announced its acquisition of CSG Systems International, a U.S.-based software company serving telecom and broadband businesses, for approximately $2.887 billion. This strategic move aims to bolster NEC’s presence in the U.S. market and enhance its global software and services business. The acquisition will enable NEC to leverage CSG’s strong U.S. customer base and Netcracker’s global expertise to offer enhanced digital transformation solutions across various industries, including telecom and broadband, ultimately strengthening NEC’s industry positioning and providing greater value to its customers.

NEC Corporation Reports Strong Financial Growth in 2025

NEC Corporation reported significant financial growth for the six-month period ending September 30, 2025, with a 5.6% increase in revenue and substantial rises in operating profit and net profit compared to the previous year. The company’s strategic initiatives, including a share split and adjustments in operating profits, have positively impacted its financial performance and market positioning, indicating strong underlying profitability and a promising outlook for stakeholders.

NEC Corporation to Merge with NEC Patent Service to Strengthen Intellectual Property Strategy

NEC Corporation has announced a merger with its wholly-owned subsidiary, NEC Patent Service, Ltd., effective April 1, 2026. This strategic move aims to optimize NEC’s intellectual property resources by integrating NEPAS into its Intellectual Property & Rule-Making Division, enhancing its ability to manage patents and analyze competitors’ trends. The merger is expected to streamline operations and reinforce NEC’s market positioning by leveraging intellectual property as a core strategic asset.